Millennials a winning business strategy for the future

Millennials a winning business strategy for the future

Life insurance is a multigenerational concept but its perceived value differs across generations. So if you find yourself having the same life insurance conversations with baby boomers, Gen X and millennials (aka Gen Y)... chances are you’re not getting the right message across.

Life insurance may not be top of mind for millennials but for a substantial portion, there are plenty of reasons for them to consider it. Question is, what is the most effective way for advisers to get this message across?

Identify their buyer persona

Born between 1980 and 2000, millennials fall broadly within the 20-40 age bracket. This comprises many different life circumstances including tertiary education, moving out of home (or moving back home), getting married, buying a home and having kids. Each of these circumstances reflects different buyer personas, with distinct traits and attributes, therefore it’s important not to lump millennials into one homogeneous basket.

A life insurance conversation with a 20-something millennial will be different to that with a 30-something millennial. Each segment represents a different stage of change and appetite for action so it’s important to identify the subgroup that’s relevant to your practice and choose the appropriate message. For example, younger millennials are more likely to benefit from an explanation of the Protecting Your Super legislation.

Physical capital versus personal capital

From a rational standpoint, millennials are more likely to value physical capital (i.e. general insurance) than personal capital like life insurance. Insuring their car and contents, which are a higher-frequency risk, is considered more important, despite having a lower financial impact.

Likewise, the risk of having a life-altering injury, being diagnosed with a chronic disease, or even needing time off work due to a more minor health problem is probably much higher than millennials realise. Let alone the out-of-pocket costs that may be incurred.

Correspondingly, there is a lack of understanding around the products that sit under the life insurance umbrella (e.g. life, TPD, trauma, income protection, business expenses). All these represent an opportunity to educate millennials from across the spectrum. On this note, millennials learn best by ‘hearing, seeing, doing’ therefore initial face-to-face conversations are a good idea.

Appealing to millennials

It’s important to understand the traits and attributes of millennials. Beyond their fondness for technology, they are known to be highly cynical towards institutions, slow to trust, respond best to meaningful interactions and are civic-minded with a strong sense of community. From a behavioural standpoint they like to be rewarded for their participation.

Millennials tend to make purchasing decisions in this order: heart, head, gut (i.e. instinct). This has implications for the messages and conversations advisers have with them. Advisers can increase their value by providing on-demand access to information and answers to questions (before Google does it for you).

Why millennials need life insurance

There are the obvious reasons why millennials should consider life insurance, and the not so obvious:

Baby boomer transfer of wealth - the anticipated transfer of wealth will see many millennials become beneficiaries of their own parents’ life insurance. Many millennials will rely on this inheritance to secure their own financial future. However many parents (four out of five baby boomers according to one study) don’t think their kids have the skills to manage an inheritance.1

The prospect of divorce throws up a number of different considerations. Women are more likely to become sole parents, experience a drop in income and generate less financial wealth in the long term. Men are more likely to face a drop in living standards and income stress.

Family situations can include caring for an aging parent, living at home for longer (i.e. boomerang kids) or raising a young family which makes older millennials more time poor.

Millennials value the input advisers can provide. Take the time to understand their needs and goals, and they will reward you in spades with their loyalty. Engaging millennials now has the potential to be a winning strategy for the future.

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